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tv   Bloombergs Studio 1.0  Bloomberg  November 5, 2016 1:30pm-2:01pm EDT

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♪ >> it is one of the fastest-growing apps the world is ever seen that's revolutionized the way we express ourselves in a single photo. kevin systrom turned out a job for mark zuckerberg in college, shared a desk with jack dorsey at an intern with what became twitter and in 2010, launched instagram as we know it. just two years later, he reunited with zuckerberg and made silicon valley history, agreeing to sell instagram to facebook for $1 billion.
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the company had just 13 employees and just 30 million users. today, over half a billion people on the planet use instagram every month, sharing more than 95 million photos and videos a day. joining me today on bloomberg studio 1.0, instagram cofounder and ceo, kevin systrom. kevin, thank you for joining us. you were born in massachusetts. home of the panthers. what kind of kid were you? kevin: nerdy. i look back and i was really into cross-country running. >> you are on the lacrosse team? kevin: i was. i wouldn't say it was a jock. >> when did you become interested in technology? kevin: my dad got her first computer at home and i just play -- played video games all the time. as i played those video games i learned you could create your own levels and then i learned programming was a thing and then i took classes in school and wanted to make my own games.
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something that inspired me. >> more importantly perhaps, photography. you also got involved in photography at a young age. kevin: it is hard to find me in a young age without a camera in my hand whether it was my dad's polaroid. i love taking photos. my family has a rich visual history now. i sat in the darkroom in college developing photos and that's where i learned about filtering. you could add these chemicals in the bath and it would change the colors of the photos. i brought that along me with instagram. >> isn't that where you also learned about square photos? kevin: yes. my photography teacher took my nice camera out of my hands and gave me this, a plastic camera that took square film format and i learned to love it. it was easy to take good photos in a square format. >> while you're at stanford, you
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had an offer to work at facebook. what happened? kevin: there was a girl involved and i didn't want to leave school. i talked to a lot of my mentors of the time who said facebook is a fad, it will go away. to this day, i think about that decision. i think it was the right decision. i love -- loved finishing stanford and i loved what i learned there. when i think about it, i think about how many technologies have come about that people doubt at first and i took that with me with instagram. a lot of people thought instagram wouldn't work in the first few years and people still think it wouldn't work. you have just got to keep going. emily: you went on to google. you interned at bodio, which became twitter. what is it like sharing a desk with jack dorsey? kevin: when i showed up for my first work, i had this look of a we hired an intern. they were super nice to me.
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without that experience, i wouldn't have the passion for social media i do today. jack is super creative and an awesome engineer as well. it was great to meet them and learn from them early on. emily: what did you learn from them? kevin: sometimes you first idea doesn't work out. the place and at became twitter, but i remember odeo not quite working. and then keeping in touch with jack as they made that transition and realizing that often when you are a company, you need to pivot into something else. instagram had a similar history were we were working on a game and it turned into instagram. emily: the first instagram photo was of your girlfriend's foot, but it is maybe the first filter that was even more consequential. kevin: had i known that would be the first photo on instagram and that instagram would get the place where there's 500 million people using it around the world
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monthly, i would've tried a little harder. my girlfriend at the time is now my wife. she said i'm not going to post photos unless they look great. she said he should add filters. i said ok i will try making a filter. i added it to the build and it took a photo of her foot and a stray dog. i posted it as a test and it lives on forever. emma: how quickly did it become something that you realized could be not just big, but really big? kevin: i may have been optimistic, but the second be launched, i said there was something new and different here. i'd work with other companies that struggled to get 100 people to sign up in a day and that first morning, that first day we had 25,000 people sign up and i remember my eyes were wide, i've never seen a service grow that way on day one. the way we sought, we kind of had lighting in a bottle and
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it was our job to capture it and continue to work on it and not screw it up. to this day we think about that as our job, just to keep it going. it has a life of its own, don't get in its way. and make it awesome. emily: are you afraid enough of snapchat? ♪
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emily: tell me about the moment or the transition where you began to contemplate selling the company or became more open to the idea.
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kevin: this was four years ago. we were in a very different place. it was 13 people, i was four years younger. didn't have as much experience as a ceo. when i look back about the decision to sell to facebook, i think the pros of it are that we got to pair up with a juggernaut of a company that understands how to grow, understands how to grow a business. has one of the best management teams intact and we got to use them as a resource. that is the hope and the dream and like most acquisitions, they don't work out that way. when you look at how it acquisitions have failed, others have left abruptly after
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selling because of culture clashes, changes in vision, whatever, misalignment. we have been able to do this for now basically over four years and that is what is awesome about that decision. i think we got a little lucky, meaning like a lot of people wouldn't get there this point, but we also work very hard to get here. emily: you are contemplating raising money and talking to her about selling to them and then mark zuckerberg came into the picture. what happened? kevin: the acquisition happen fairly quickly. mark and i decided it was the right thing to do and basically closed over a weekend. i think it was easter weekend. i remember being at his house and saying let's do this. we are aligned. lawyers were everywhere, we were signing documents and figuring things out. then it was a whirlwind because we were in this and no man's land for six to nine months figuring out whether this deal would go through and once it did we were able to partner. immediately the value became
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clear because they got together and are able to fix our infrastructure. every day that went by we were struggling to keep the site up. just struggling under our own growth. we were able to figure out spam quickly. we were having these giant spam attack and we got them in there and started using their tools immediately to fight spam. a lot of those things happened immediately after the acquisition and helps the company grow and skyrocket. emily: why not twitter? kevin: there were a lot of companies, there was google. facebook was the one that took it seriously and i think mark acted quickly and decisively. at the same time, you look at the pairing now and it feels like it makes sense. emily: google was interested in buying you? kevin: i think every company at that point was. i don't think google specifically, but companies were interested in what instagram was up to. we were a bit of an anomaly because it would see us and there would be 13 people. at the same time, we had all
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this growth. they couldn't get why those two things could be true the same time. i think a lot of people wrote off photos. i think no one quite understood how important photos would be for the future of social media and expression. if you look at the way people express themselves now, it is not through just chat. it's through photos and sending them to each other. no one quite understood that was the revolution that instagram was about to embark on at the time. emily: facebook bought instagram for about $1 billion. a year later, citigroup thought -- valued it at $35 billion. in that moment did you ever think oh no, what i just do? kevin: no. when talking to mark, he gave away 99% of his wealth. we are not in his game to make money, we are in this game to change the world. if you talk to people whose money doesn't matter. they measure value on what it does for the world. and you unlock some kind of value? that's what mark and i focus on every single day. emily: when mark opened your company, he place for you to work independently. has he lived up to that?
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emily: he -- kevin: he has been true to his word and then some. i've learned a tremendous amount from him. about our transition to advertising, a better transition to a more global community, about strategy. he's one of the most interesting strategic long-term strategic thinkers. think about having the best board member in the world. imagine how many companies would like to have mark zuckerberg on their board. that's what we get and its independent, but also get amazing guidance and counsel from someone is going to build a tremendous company. i think our transition to advertising was an interesting one. i was of the belief if we had fewer advertisers, there would be higher quality it turned out to be the opposite. if you have more advertisers, you're able to bring in an entire ecosystem where they compete against each other and you get a higher quality advertising. that's what i didn't realize at the time. i was able to learn a lot. emily: you mentioned you mentioned to meet with mark and john and brendan. patti is the instagram taking advantage of the more futuristic things that facebook is working on like virtual reality?
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kevin: if our vision is to make you feel it you could travel anywhere in the world in a fraction of a second and experience with happening in the world. imagine a day when you put in a headset and be at a coldplay concert, seeing something happening like a big protest or riot anywhere in the world. or something as simple as a friend's wedding. that's the experience we love to create and i think virtual reality in the coming years will play a critical role in seeing that vision come true. emily: how about artificial intelligence? kevin: we use that today. that is what powers advertising
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and making sure we have the right amount of targeting. emily: will we see more of it? kevin: oh for sure. one thing i've learned is the more personalization you have, if we can have an experience that caters to you, you the individual. if we know your interest in what you engage with, we can use machine learning and artificial intelligence to make a much better experience for your instagram. emily: what about e-commerce? have you thought about adding a "buy" button? kevin: i'm really excited about the future of instagram. where we start and where we enter are two different places. where we are starting is letting advertisers get to their audience, promote their own products or posts and then basically from there they take action on the advertiser's website. if we can make that more seamless in the future, of course we will. it's just, we are starting to walk before we run. emily: who do you see as composition? kevin: we as consumers only have a limited amount of time to pull out phones and do something so anyone who is competing for time. emily: one employee told us they are concerned that facebook and instagram aren't more scared of snapchat. are you afraid enough of
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snapchat? kevin: i don't think it's our job to be afraid, so much as understand what's going on in the world. i think we are competing its -- against many different services for time and eyeballs. getting to 500 million users around the world is a big feat. 300 million of those are daily active. 300 million people who open up instagram every single day, 21 minutes day, that's a big feat. we are absolutely not sitting happy, thinking that will last forever. we need to keep innovating and increasing products. emily: harassment is a problem across all of social media. one singer reportedly attempted suicide after reading comments on instagram. do you need to get harder line? kevin: we take reports of abuse or harassment very seriously. we provide tools to a lot of public figures to monitor the content. it's unacceptable for that to just on any platform and we will be a platform that takes it seriously.
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emily: you redesigned your logo which some people did not like. emily: there was a lot of drama when you hired former putter head kevin we'll -- wheel. ♪
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emily: there was a lot of drama when you hired twitter's former head of product especially given , the struggles they are going through. you're a product focused ceo. how much impact can a head of
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product have when you are the decider? kevin: product management is different from product strategy. building products that were operational, more the guts of the machine. once you have an idea, how do you get it to become a reality. that's the thing kevin brings an amazing expertise to instagram. he has done that before. he has seen that at scale. i don't like to say i'm a good product manager. i think the team will attest. but i love thinking strategically. when you combine kevin's personality and expertise and mine, you get a great pair that i think is like a yin and a yang. emily i noticed you haven't used : your twitter handle much recently. you have a very simple twitter handle. do you think twitter can turn itself around? kevin: i probably should use my twitter account. it is an amazing platform and i think that every company a longer course of growth has bombs.
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it happens. that is a hard question to answer from anyone's perspective and i respect a lot other done in the past year. emily: you mentioned it every day gets mark obligated. how much of instagram's successes been focused on commitment is implicitly? kevin: that's the complex part i think. it is easy to let a product get bloated. it's easy to say everyone, just go work on whatever you want. we will see what six. -- we will see what sticks. before you note, you've got a product that's all over the place that doesn't have a singular voice. that itself is complex. managing to get something to be simple and straightforward even though it has a tremendous amount of complexity behind the scenes, that is the hardest part of any ceo's job is actually saying no more than you say yes. emily: what are some features that you pondered or throw around that you ultimately said no to?
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kevin: we've a lot of people asking for sponsored filtering at one point. there was a toothpaste company that wanted atc whitening -- teethd a -- wanted a whitening filter and i just, that's a funny example, but it makes sense because always -- because we have filters, which just use sponsored versions. we focused on doing the right thing by the consumer would is to not make them so commercial and focus on what people love most about them. there are decisions like that every day that are easy, you can make a few bucks by doing that, but they ended up adding complexity to the product and it doesn't add a lot to your bottom line. emily: you redesigned your logo, which some people did not like. as we called it, a travesty. what you learn from that? kevin: i knew going in that it be a difficult change. there's not a single company i've seen whether they are starbucks or gas that is changed their logo and it has been easy. there is not a single company. -- whether you are starbucks or gap, that has changed their logo
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and it has been easy. there is not a single company. i think the question is how much work to do print to it -- do you put to it before you get there? much resolve do you have? do you have the right reasons? you want to give people the idea that were not just about photography, we were more general than that. we were about creativity, thus the colors and simplicity. we wanted something that would scale across different medias. it will great on a phone, t-shirt, billboard and wears anywhere. as much as i love the original one, it wouldn't do that. the current one i didn't have a heavy hand in. we've and amazing design team that fought for all these things. an awesome presentation of the evolution of brands a long time. with every branded goes are being complex to simpler and simpler and simpler to iconic. you can do that with apple, at&t, you name it. the big brands do it. we just get a few steps. -- we just skipped a few parts. and that's ok. because it's going to be hard. what did i learn? it's hard. what else that i learn?
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it's going to be ok. emily: your timeline is algorithmic. some people did not like that. how is that working out? kevin: absolutely. engagement is up because of it. it means people are liking instagram more. they have more feedback on their part, more talking on the post of actually want to give feedback to. the good news about an algorithmic feed, unlike what people believe, it is not chronological, it is fairly chronological, it just take the stuff you haven't seen it reorders it to the best south -- best up top. people miss more than 70% of their feed and that is not ok with us. it's not ok to them. emily: you've been traveling around the world. what have you last year been like for you personally? kevin: i don't think i would say the nerd in high school would be at a fashion show someday. it still feels weird. i go to these because i'm a representative of the brand and i believe by having
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relationships with people in these different industries whether it is the pope or doing fashion dinners with anna wintour, those things couldn't be more different, but are both extremely important. emily: you met the pope not once but twice. what was that like? kevin: they're not many moments where you think first of all, why am i here? but also, when it happens, you realize how many remember this moment for my entire life. when you realize you can onboard someone who will going on in the history books for hundreds, if not thousands of years and that they are choosing your product
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to connect with people that care most about their message, that is awesome. emily: silicon valley is accused of being arrogant and filled with overnight billionaires. i realize that is an exaggeration for pretty much everyone. but has -- if anyone has close -- come close to the story, it's you. you made $1 billion, not overnight, but you made a lot of money. have do you do about personally? kevin: it is not an easy answer because of not sure this in a guidebook for it. what you begin to realize is that money matters in the sense that it puts a roof above your head and it feeds you and your family, but beyond that, what matters most is your impact on the world. your relationships with people, your family, your friends. i think what you realize is that a lot of people work their entire lives to make more money in a fruitless voyage, when really what you should really be aimed at is what should your impact beyond the world. i've had to learn a lot. someone who didn't manage a single person six years ago, now we've got a big team of 500 plus people. that make you change quickly.
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you learn a lot of patience, how to communicate more clearly. to have resolve in situations. not just personnel situations, but company situations. you learn to ride the bumps a little more easily. emily: you are 32 years old. do you ever want to start something new? kevin: totally. whether it is philanthropic or helping other people start businesses. the way i do this now is i do angel investing and that's how i scratch that itch. there are a lot of ways to have an impact about starting another company. emily: what is your single piece of advice for aspiring entrepreneurs? kevin: it sounds cheesy, but the one piece i got was follow your passion. i turned down a lot of jobs that would pay more or be the right thing to do coming out of school like stanford and i did what i love. emily: kevin systrom, cofounder and ceo of instagram, thank you. kevin: thank you. this is great. ♪
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♪ ashlee: if you are having tea with a giant hello kitty doll, then you are almost certainly in japan. ♪ ashlee: this is a place that

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